Aston Martin logo badge

Analysis: How Racing Point’s Aston Martin F1 deal came together

2020 F1 season

Posted on

| Written by

As we exclusively revealed in December, Canadian fashion magnate and boss of Silverstone-based Racing Point F1 Team Lawrence Stroll has taken the first steps towards acquiring a share of Aston Martin Lagonda (AML), the troubled luxury sports car manufacturer. The deal takes the form of an in initial bridging loan worth £55.5m, ultimately to be converted into an equity stake of up to 20%.

During the process, present AML chair Penny Hughes (ex-Coca Cola) will step down, to be replaced by Stroll. Further executive reshuffles are expected to be announced, with the future departure of AML CEO/president Dr Andy Palmer a distinct possibility.

Although various outlets have alluded to a late Thursday board decision between Stroll’s group and automotive conglomerate Geely, RaceFans understands that interest from the Chinese carmaker waned earlier, and an outline agreement was reached with Stroll’s consortium on Wednesday, and Thursday was spent sorting regulatory and legal formalities.

This is borne out by AML’s statement on voting rights issued at noon yesterday, and the formal announcement at 7am Friday via the London Stock Exchange’s website. Given the legalities, such matters are not decided overnight. Indeed, Palmer would not comment on when the deal was eventually struck.

According to various insiders, AML’s situation was precarious. The company faced three choices: accept an injection of capital, draw down on a US loan facility at punitive rates, or face a severe cash-flow crunch which could have seen it unable to meet short-term obligations and potentially plunge into administration, a situation the company has regularly faced in its 113-year history.

Lawrence Stroll, Racing Point, Monaco, 2019
Stroll’s consortium includes “pretty big names”
“We would have had to take on more debt at nosebleed levels,” Palmer told Autocar, the publication with which RaceFans originally revealed Stroll’s plans to acquire an interest in AML. “$100m at 15% interest is pretty alarming, and inevitably would have created problems down the road.

“It’s not where anyone wants to go, because it is toxic debt, but I’m not going to say that we would have faced doomsday – just issues to overcome down the road. Thankfully we have a solution that I sit here now and reflect on as being enormously positive for now and the long-term.”

Palmer previously told Automotive News Europe “in the first century we went bankrupt seven times” and that “the second century is about making sure that is not the case.” Indeed, with AML being the preferred ride of fictitious super-spy James Bond, wags have suggested that 007 referred not to his code name, but to the brand’s bankruptcies.

Advert | Become a RaceFans supporter and go ad-free

But why choose a consortium led by Stroll, a relatively unknown in automotive terms, over Geely, the owner of Volvo, Polestar, Lotus and London electric taxi manufacturer LEVC and thus a major automotive player?

Lance Stroll, Racing Point, Yas Marina, 2019
Stroll’s son could be racing an Aston Martin next
“Lawrence and his consortium are a group of pretty big names and it is a great sign of confidence in Aston Martin and our plan that they have invested in us,” said Palmer. “They have huge experience in luxury brands and as much as anything that gives the company – and me personally – a group of mentors to work with.

“On a more personal level, Lawrence shares a lot of my beliefs and passions. He was clear that the mid-engined plans had to progress, he has a passion for F1, and F1’s ability to sell cars for you, he can see the value of the hybrid V6 and more. And he loves cars – he’s an investor who wants to engage – there would be nothing worse than a disengaged investor.”

The deal has far-reaching implications for the car manufacturer as well as various Formula 1 teams – including, of course, Racing Point – and Formula 1 itself. The announcement provides for Aston Martin to shift its title sponsorship of Red Bull to Racing Point when their current contract expires at season’s end. A name change to Aston Martin Racing or Aston Martin F1 is envisaged, having already been considered but rejected for this year.

In a subsequent media release, Red Bull stated that their current contract with Aston Martin will not be extended beyond the current term – thought to be the end of 2020 – and that the team had agreed to waive the F1 exclusivity clause. This suggests AML branding could well appear in some form on both teams this year, with title rights following in the 2021 F1 season.

This waiver is believed to have been crucial to the overall deal, for AML and the greater Red Bull motorsport operation have been partners at various levels. RaceFans has learned an agreement was struck between Red Bull Racing boss Christian Horner and Stroll during a meeting convened at Racing Point late last week.

Strikingly, in its statement Red Bull wished the employees and shareholders all the best for the future, in that order…

Advert | Become a RaceFans supporter and go ad-free

Aston Martin’s logos and title rights have, though, sat awkwardly on Red Bull’s Honda-powered F1 race cars, and have their roots in Infiniti’s former sponsorship of earlier Renault-powered Red Bulls. At the time Palmer was a senior executive manager within the Renault Nissan Alliance, parent company of the Japanese luxury brand, and struck up a close relationship with Horner that has endured.

Aston Martin Valkyrie, Silverstone, 2019
Aston Martin’s Red Bull-developed Valkyrie arrives this year
The fate of the Aston Martin Valkyrie, an AML-Red Bull hypercar project providing Le Mans levels of performance for the road and a cornerstone of the World Endurance Championship’s new premier class, has been decided. In a regulatory statement the company said the “technology partnership between Aston Martin Lagonda and Red Bull Advanced Technologies would continue until Aston Martin Valkyrie is delivered”.

The WEC programme is not thought to be under threat as the motorsport arm of Canadian automotive giant Multimatic has been confirmed as partner for the project. According to a WEC source this is unlikely to change.

However R Motorsport, which brought Aston Martin’s Vantage into the DTM in 2019, announced last week that project will not continue. The team’s top driver in the standings at the end of its first season was Daniel Juncadella in a lowly 14th.

The withdrawal of Geely from the negotiating table – although it may well return in future – opens up interesting investment opportunities for the company. Geely, said to be unhappy at being snubbed, was interested in a partnership with AML in order to showcase its electric technologies in AML’s heavily delayed range of electrified Lagonda executive supersaloons.

However, Lotus recently inked deals with Williams Advanced Engineering to co-operate on an £2m electric hypercar, codenamed Omega, and may thus use the capital saved to expand the relationship. Although a majority share of WAE was recently acquired by EMK Capital, Williams Grand Prix Holdings PLC retains a significant interest in the advanced technology company, so a far-reaching deal with the Williams F1 team cannot be excluded.

Go ad-free for just £1 per month

>> Find out more and sign up

That said, Williams is expected to continue with Mercedes power units beyond the current term which expires this year. But some form of Lotus branding on the F1 cars said to be under consideration.

Toto Wolff, Lawrence Stroll, 2018
Wolff and Stroll, pictured in 2018, are close
Nonetheless, with Racing Point committed to using Mercedes power units and transmissions, and Mercedes parent Daimler being a 4% shareholder in AML in return for technological co-operation, parts sharing is expected to increase within both F1 operations where provided for in the regulations. Racing Point will also use some of Mercedes’ 2020 brake system components, supplied by a third party.

The statement refers to a 10-year term sheet under which the Racing Point F1 Team becomes the Aston Martin F1 works team with effect from the 2021 season, with Aston Martin Lagonda in turn receiving an economic interest in the team and a sponsorship arrangement from 2021 and for the subsequent four years, renewable for five years subject to certain conditions.

None of this, though, precludes a further merging of sorts of the two F1 operations once the dust of the latest deal has settled and the F1’s commercial and regulatory road maps are formalised – a process that seems set to drag well into the second quarter – particularly as Stroll and Mercedes F1 boss Toto Wolff have developed a close friendship.

A close associate of both recently told RaceFans, “Lawrence has replaced [the late] Niki [Lauda] as Toto’s flying companion of choice” – and an intriguing line in AML’s statement names the current consortium members, then states that it is not limited to these. In addition, to the chairman, the consortium may nominate a further director subject to certain conditions being satisfied.

The possibility of Aston Martin returning to F1 as a full constructor, following its brief flirtation with the sport six decades ago, has long been a subject of speculation. As things stand the team which entered F1 racing in Eddie Jordan’s Irish (and 7Up) colours may be about to return to similar shades, albeit in more of a British Racing Green hue.

2020 F1 season

Browse all 2020 F1 season articles

Author information

Dieter Rencken
Dieter Rencken has held full FIA Formula 1 media accreditation since 2000, during which period he has reported from over 300 grands prix, plus...

Got a potential story, tip or enquiry? Find out more about RaceFans and contact us here.

16 comments on “Analysis: How Racing Point’s Aston Martin F1 deal came together”

  1. This is good news. It’s about time that there was a shake up of the status quo. Stroll is certainly an energetic chap with an extremely credible CV and he should be able to mix it with the top teams in the not too distant future. AM/RP’s weakest link is their drivers and if they want to mix it with the best then they will need better drivers.

    1. Sergio Pérez has enough pedigree and experience to carry out the Aston Martin project, Pérez is a driver completely made in the manner of the team, I do not think there is anyone outside that team to know and better understand the needs that Aston Martin needs to In the future, Pérez has enough experience and achievements to lead any effort to bring Aston Martin to the highest level they want to reach.

  2. an opportunity for Fernando Alonso?

    1. That is a very interesting thought, @rb10!

    2. Does he have any past with Aston or Stroll?

      I would say no, it doesn’t change anything for him. Besides, I would doubt any team really wants to bring him back.

    3. @rb10 – not sure if Kimoa would play well with Tommy Hilfiger though. I’ve seen Alonso getting his brand on the cars he drives in recent years.

    4. Really that’s his best chance besides Renault and that seems remote.

      Lance to WEC and Alonso/Perez in Aston. Seems possible.

    5. Well who ever is going to drive in that seat he will follow names like Carrol Shelby and Roy Salvadori.

  3. Good news for Aston Martin, good news for Racing Point. I do hope that Dr. Palmer gets to stay in his role at Aston, though – from the outside I think he’s been doing a very good job in a tough situation and the products they’ve developed and released during his tenure have been their best ever. He’s also a terrific ambassador to the brand, very enthusiastic and his pride in Aston is genuine. He even takes time to reply to questions from fans on Twitter!

  4. Well .. a opportunity for Lance to drive WEC in his fathers team in a Newey designed car.
    Nice solution for a mediocre driver in F1 and one to save his face.

  5. This is good news for AML, good, but not great. In the end they still need to revive an ailing business and make it profitable.
    This being an F1 Racing oriented site, all the focus seems to be on the racing side of things, who is continuing, who is gaining or loosing $pon$or$hip and how the racing teams are to be organized.
    Some will draw the picture that Racing Point has (sort of) taken over Aston Martin Lagonda. The next step in the wish full thinking process being the holy grail …. “A Works Team”. Yes, the tail wagging the dog or is it the dog taking over control of Purina.?
    Prediction is that there will be a flurry of discussion (here) on Teams, Drivers, Designers and Power Units, who goes where, runs what, designs, manages etc. But in the end, the main and only goal for Stroll Sr. is to make AML, RP etc. a profitable and world class brand. The racing side of things is secondary and will be promotional support for the business side. Ferrari runs their show like this and their “Brand” has enormous cache’. The envy of many a business.
    For AML / RP / Stroll Enterprises to be successful, they need to sell cars, turn a profit and set up for a long term future. The racing is the main focus of those of us here in this forum, but it is primarily a supporting role in the business of things.
    Gonna be a great and entertaining ride.

    1. Well said @rekibsn, turning around a struggling car brand isn’t easy (or cheap) – in that I suppose it’s a similar type of challenge (though quite different in practice, I imagine) to getting an f1 team towards the top – and while this is a new and interesting development for AML, it’s certainly not a final positive ending.

  6. So if the rumours turn out to be correct about Merc pulling out at the end of the season. Does Stroll intend to do a Mateschitz and own and run two F1 teams for 2021 and beyond with Wolff running one of them?

  7. That’s one hell of a daddy is Mr Stroll senior.
    AM’s CEO is quoted as saying, “We don’t sell cars we sell dreams.” Not many bought into that, but obviously Stroll knows something other people don’t.

  8. It is exactly Stroll saving AML. He is a wealthy man and can afford it.

  9. The text above has been revised: It originally stated Racing Point will use Mercedes 2020 braking system, as you can see above this has been amended to note it will only use part of the system.

Leave a Reply

Your email address will not be published. Required fields are marked *

All comments are moderated. See the Comment Policy and FAQ for more.
If the person you're replying to is a registered user you can notify them of your reply using '@username'.